Hong Nam-gi Emphasizes One Team, to Meet Heads of 5 Economic Organizations Next Week

Quarterly Regularization of 'Government-Business Communication'... Economic Five Leaders Meeting Scheduled Next Week

[Asia Economy reporters Jang Sehee and Kim Heungsun] Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance, will meet with the heads of the five major economic organizations next week. Although he has emphasized communication to the extent of holding three meetings this year alone, there are criticisms that these gatherings are merely “formal occasions” as he remains silent on actual corporate demands.

On the 5th, a government official stated, "Deputy Prime Minister Hong plans to meet with businesspeople struggling due to COVID-19 to listen to their on-site difficulties," adding, "There are plans to regularize quarterly communication." He also mentioned, "Currently, we are coordinating the attendees and discussion topics for next week’s schedule."

The meeting is expected to be attended by the heads of the five major economic organizations: Chey Tae-won, Chairman of the Korea Chamber of Commerce and Industry; Sohn Kyung-shik, Chairman of the Korea Employers Federation; Koo Ja-yeol, Chairman of the Korea International Trade Association; Kim Ki-moon, Chairman of the Korea Federation of SMEs; and Kang Ho-gap, Chairman of the Korea Federation of Medium-sized Enterprises. The government views this as significant as it is the first event to regularize communication since the meeting in April.

However, the business community points out the contradiction in the government’s efforts to communicate while pushing ahead with regulations unfavorable to companies. The government has not considered lowering corporate and inheritance tax rates or easing conditions for business succession deductions, and the business environment has worsened further due to a sharp increase in the minimum wage. When Hong Nam-ki took office in 2018, he stated, "We will actively supplement some policies that moved faster than market expectations, such as the minimum wage," but the minimum wage rose by double digits?16.4% in 2018 and 10.9% in 2019 compared to the previous year. Next year’s minimum wage will also increase by 5.1%.

Amendments to the Labor Union Act, the 52-hour workweek, and the Serious Accident Punishment Act are also hindering business management. A business community official said, "The newly introduced regulations are ‘megaton-level’ burdens that can worsen labor-management relations or impose significant operational challenges," adding, "Labor’s demands have been relatively well accepted, while business demands have only been reflected in relatively minor areas such as export or tax support, so from the corporate perspective, these regulations effectively represent a strengthening of restrictions."

Kim Yong-chun, head of the Employment Policy Team at the Korea Economic Research Institute, emphasized, "Because the opinions presented by the business community have rarely been accepted, even during meetings or surveys, businesspeople do not express honest views or become discouraged, leading to low morale," and stressed, "There needs to be a major policy shift that goes beyond formal meetings to invigorate businesses."

The Investment and Win-Win Cooperation Promotion Tax System (Win-Win Cooperation Tax) is also cited as an example of ignoring the voices of large corporations. The government designed it with the intention that large companies share their profits with small and medium-sized partner firms by encouraging investment, wage increases, and win-win support proportional to net profits. If desirable expenditures are deemed insufficient, weights from 1 to 3 are applied. Regarding this, Choi Jun-sun, Professor Emeritus at Sungkyunkwan University, pointed out, "Retained earnings are assets left after paying taxes, and classifying 60-80% of current income that was not reinvested in investment or wages as non-reinvested income and taxing it at 20% constitutes clear double taxation."

This content was produced with the assistance of AI translation services.